OCC Commits to Next Step on Climate Risk for Banks

The U.S. Office of the Comptroller of the Currency committed to putting out guidance on how it will integrate climate risks in its oversight of banks.

One of the biggest moves for climate finance today, among all the news coming out of COP26, was a commitment from one of our largest financial regulators to include climate considerations in their bank oversight. The Office of the Comptroller of the Currency (OCC) here in the US committed to putting out guidance on how it will integrate risks from climate change in their examinations of the banks.

Specifically, the OCC will put out a framework for what is known as supervisory guidance by the end of the year, and remember the year only has 58 days left. This is coming soon. And, I could not be happier about it.

This is an essential step for regulators to help understand the risk to our financial system from climate change—and to start working to prevent a possible 2008-level financial crisis BEFORE it happens. This can help protect jobs, savings and prosperity for millions and millions of people in our country.

The exact words from the Acting Comptroller of the Currency Hsu:

As the Acting Comptroller of the Currency, I have prioritized the need to incorporate climate change into risk management frameworks to address the safety and soundness of the federal banking system. The OCC is working to take a leadership role to understand these significant and complex challenges. We plan to develop high-level climate risk management supervisory expectations for large banks and hope to issue framework guidance for comment by the end of the year.

As we said a few weeks ago in a letter to Acting Comptroller Hsu and other regulators, “Issuing clear guidance for banks and examiners on expectations for climate-related risk exposure is a necessary first step regulators must take: one that many banking regulators around the world have already implemented and have found in doing so that banks are falling short on prudent climate risk management.” Acting Comptroller Hsu is moving quickly to take this step, and I applaud that and his proposed timeline. This can help protect our financial system, your savings and our economy.

Other materials:

Letter to regulators and press release:

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